Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

INTERNATIONAL PAPER CO. v. SUWYN

June 19, 1997

INTERNATIONAL PAPER COMPANY, Plaintiff, against MARK A. SUWYN and LOUISIANA-PACIFIC CORPORATION, Defendants.


The opinion of the court was delivered by: PARKER

 On January 2, 1996, Mark A. Suwyn ("Suwyn") resigned as Executive Vice President of International Paper Company's ("International Paper") forest and specialty products division. That same day he assumed new responsibilities as Chairman and Chief Executive Officer ("CEO") of Louisiana-Pacific Corporation ("Louisiana-Pacific"). Alleging that this move violated a noncompetition agreement ("the Agreement" or "the Noncompete") Suwyn had signed in July 1995, International Paper brought this action seeking to enforce the Agreement.

 International Paper's primary contention is that the Agreement executed by Suwyn barred him from joining Louisiana-Pacific, a competitor, for eighteen months after his departure from International Paper. Suwyn, in turn, claims that under the Agreement, he was precluded, for that period, only from working for major companies that competed with International Paper's paper division, as well as certain specified companies. According to Suwyn, Louisiana-Pacific falls into neither of those two categories, and therefore his employment by Louisiana-Pacific did not therefore violate the Agreement.

 I find this to be one of the rare cases in which the parties to an ambiguous contract had such fundamentally different meanings in mind when they ostensibly executed their agreement that no contract was formed. Moreover, even assuming that a valid contract exists, International Paper failed to establish the likelihood of irreparable injury necessary for the injunctive relief sought. See Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 95 S. Ct. 2069, 45 L. Ed. 2d 12 (1975). The matter was tried to this Court from April 7 through 14, 1997. The Court's Findings of Facts and Conclusions of Law follow.

 Introduction

 International Paper has sued Mark Suwyn, one of its former Executive Vice Presidents and the current Chairman and CEO of Louisiana-Pacific, alleging that he breached his Noncompete so that he could fulfill his long-held ambition of becoming a CEO of a Fortune 500 company.

 International Paper Company is a multinational forest products and paper company. In 1995, International Paper ranked thirty-nine on the Fortune 500 list of industrial companies. In 1995, its gross revenues totaled approximately $ 20 billion. Its five areas of operation include (1) printing papers, (2) packaging, (3) forest products, (4) distribution of paper products, industrial products and graphic arts supplies, and (5) speciality products such as facings and laminates for the construction and furniture industry. Of those areas of operation, International Paper's printing papers division generates the largest percentage of the company's net sales. *fn1"

 Louisiana-Pacific was formed in 1992 when it was "spun off" from Georgia-Pacific as a separate company. Like International Paper, Louisiana-Pacific is a Fortune 500 company. Its 1995 net sales totaled approximately $ 2.8 billion. In contrast to International Paper, Louisiana-Pacific does not manufacture paper but derives most of its income from building products. *fn2" In 1994, for example, of Louisiana-Pacific's $ 3.1 billion in total sales, approximately 93% came from building products. In 1995 and 1996, revenue from building products constituted 89.2% and 93%, respectively, of Louisiana Pacific's gross sales.

 From January 1992 to January 1996, Mark Suwyn was Executive Vice President in charge of International Paper's forest and speciality products division. In 1994, forest and speciality products accounted for approximately $ 1.6 billion, or 10%, of International Paper's total sales for that year. Though generating a smaller percentage of International Paper's total net sales than the company's paper division, the forest and specialty products division was still a significant component of the company.

 Prior to joining International Paper, Suwyn had spent virtually his entire career -- twenty-five years -- at E.I. DuPont de Nemours ("DuPont") where he worked with John Georges ("Georges"). In 1979, Georges left DuPont to become executive vice president of International Paper's wood products division and in late 1984, he became International Paper's CEO and in early 1985, its chairman. Beginning in early 1991, Georges, who regarded Suwyn as a capable and talented manager who had risen rapidly at DuPont, endeavored to recruit Suwyn. Although Suwyn would eventually find himself in the position of an International Paper executive vice president, he initially was not interested in leaving DuPont. It was during the course of these early conversations that Georges first learned of Suwyn's ambition to one day become chief executive officer of a major company.

 In 1992, Georges, facing the pending resignation of an executive vice president, again approached Suwyn about joining International Paper. Suwyn, by this time, was willing to reconsider leaving DuPont, but told Georges that he would only move to International Paper if it afforded him some realistic opportunity of succeeding Georges as the company's CEO. Georges, in response, told Suwyn that he could be a viable candidate and had reasonable prospects of positioning himself as Georges's successor. He further stated, however, that there would be other candidates for the position and that it was too early to discuss meaningfully the issue of Georges's succession. Suwyn, also communicated his desire to be named to International Paper's Board of Directors ("the Board") should he move there. Two other executive vice presidents who stood as potential successors of Georges were Board members. Georges told Suwyn that he would have ample exposure to the Board but Georges was unwilling, at that time, to commit to Suwyn's membership.

 Suwyn was offered employment by International Paper in January 1992. In a January 30, 1992 letter setting forth the terms of his employment, International Paper agreed that during his tenure at International Paper, Suwyn would be eligible to participate in various executive compensation programs provided for in International Paper's Long-Term Incentive Compensation Plan ("LTICP"). The January 30 Employment Letter also provided that Suwyn would be eligible to participate in International Paper's Management Incentive Plan as well as its Performance Share Award and Executive Continuity Award Programs.

 The negotiations surrounding Suwyn's employment were finalized in February 1992 and Suwyn commenced employment with International Paper as Executive Vice President for Forest and Speciality Products on March 1, 1992. Although Suwyn was not asked to sign a noncompetition agreement as a condition to joining International Paper, he was required to sign a confidentiality agreement which broadly proscribed disclosure of any confidential or proprietary information obtained while he was employed at International Paper. Approximately 8,700 International Paper employees, including 700 of its most senior executives were also required to execute similar confidentiality agreements.

 As International Paper's Executive Vice President for Forest and Speciality Products, Suwyn had oversight responsibility for, among other things, International Paper's masonite building products, decorative products, imaging products, veratec non-wovens, chemical business, as well as Resource Net International, a large paper distribution business which purchased paper from outside sources for resale. In 1995, these business generated approximately $ 8 billion in revenue, of which approximately $ 4.5 billion was attributable to Resource Net.

 In 1993 and 1994, International Paper was stung by the defections of several high-level executives. Dana Meade, Executive Vice President of the printing papers division and a member of the Board, left to become CEO of Tenneco, Inc., an international conglomerate. Other key executives left International Paper to work for Weyerhaeuser Company, Union Camp Corporation, and James River Corporation -- all companies that Georges considered to be International Paper's competitors. Georges felt strongly about the inequity of senior executives, who had benefited from the training, support, and experience they received at International Paper, bestowing those benefits on other companies.

 In late 1993 or early 1994, in an effort to combat this problem, Georges decided to implement a policy requiring select employees to execute noncompetition agreements. The early versions of the agreements were quite broad. They were triggered, for example, even if an employee was discharged without cause, and they required their signatories to concede the reasonableness of the agreement. As a result, these preliminary drafts were met with considerable opposition.

 Eventually, the more objectionable features were dropped and by April 1994, a form noncompetition agreement was developed and circulated to targeted executives for signature. The form noncompete, which was identical to the Agreement proffered to Suwyn for execution provided, in part:

 
C. Non-Compete Provisions
 
4.(a) While an employee of International Paper, I agree not to compete in any manner, either directly or indirectly, whether for compensation or otherwise, with International Paper, or to assist any other person or entity to compete with International Paper.
 
(b) After the termination of my employment for any reason except involuntary termination without cause, I agree that for a period of eighteen (18) months following such termination I will not compete with International Paper either:
 
(i) by producing, developing or marketing, or assisting others to produce, develop or market, or
 
(ii) by accepting employment from or having any other relationship (including, without limitation, through owning, managing, operating, controlling or consulting) with any entity which produces, develops or markets,
 
a product, process, or service which is competitive with those products, processes, or services of International Paper, whether existing or planned for the future, on which I have worked, or concerning which I have in any manner acquired knowledge of or had access to Protected Information, during the five (5) years preceding termination of my employment. The foregoing restrictions shall apply to all geographical areas where I performed services for International Paper prior to such termination and to all other places where International Paper does business and/or did business during the term of my employment.

 The Agreement as presented for signature would, thus, have restricted its signatories from leaving and, for eighteen months, joining any company that competed with International Paper or produced a product that competed with any product International Paper made. In view of International Paper's position as a world-wide Fortune 500 company, the Agreement was -- and was intended to be -- extremely broad.

 Although signing the Agreement was not an explicit condition to continued employment, failure to do so would result in significant financial penalties. Any executive who was asked but refused to sign was precluded from receiving further incentive compensation awards under International Paper's LTICP pursuant to which stock options, which formed a significant component of executive compensation, were granted. For a senior executive at International Paper, refusal to sign would, as a practical matter, have ended his or her career at the company.

 For Suwyn, who had long harbored the ambition of becoming the CEO of a major company, the introduction of the Agreement posed a major dilemma. Georges, by mid-1994, was approaching retirement but had not selected a successor. Although the forest and speciality products division had enjoyed considerable success under Suwyn's direction, it was far from clear that Suwyn would succeed Georges. Suwyn still had not been appointed to International Paper's Board, which he believed placed him at a disadvantage in succeeding Georges since key competitors in that endeavor were ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.